Key takeaways
- An index fund tracks a whole market instead of trying to beat it.
- An ETF is a fund you buy and sell on the stock exchange like a share.
- Low fees make a huge difference over decades.
In short
An index fund buys every company in a market index, so you own a small slice of all of them. An ETF is a fund you trade on the stock exchange. Both are popular with beginners because they are diversified and usually cheap.
What is an index fund?
An index is a list of companies — for example, the 500 largest US companies or the largest companies in the world. An index fund buys all of them in the same proportions as the index. When the market rises, your fund rises; when it falls, your fund falls too.
What is an ETF?
An ETF is a fund that is listed on a stock exchange. You buy it through a broker or investing app, just like a share. Many ETFs track an index, which is why the two terms are often used together.
Why fees matter so much
Fees are taken every year, so small differences compound into big ones. Here is what €10,000 could grow to over 30 years if the market returned 6% a year before fees:
Source: GlenMoney calculation, compound growth, before tax
Worked exampleThe cost of a 1% fee difference
Paying 1% instead of 0.2% leaves you with about €11,000 less on a €10,000 investment after 30 years — without changing anything else.
How to start, step by step
Step by stepYour first index fund
- Build your emergency fund first. Only invest money you won't need for at least five years.
- Pick a regulated platform. Check it is authorised by your country's regulator.
- Choose a broad, low-cost fund. A global index fund spreads your money across thousands of companies.
- Invest regularly. A monthly amount smooths out market ups and downs.
- Leave it alone. Check once or twice a year, not every day.
🧮 Compound interest calculator
Estimates only, before tax and fees.
Index funds in your country
Tax rules for funds differ a lot between Ireland, New Zealand and Singapore. Read your country's guide before you invest.
Frequently asked questions
Is an ETF the same as an index fund?
Not exactly. Many ETFs track an index, but an ETF is a fund that trades on a stock exchange, while some index funds are bought directly from the fund provider.
Can I lose money in an index fund?
Yes. If the market falls, the fund falls with it. Index funds suit long time horizons where you can ride out the ups and downs.
This article is general information, not personal financial advice. Consider your own situation and, if needed, speak to a licensed adviser.